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Saturday May 25th, 2024

Sri Lanka Trade Minister threatens egg farmers amid import controls on maize

ECONOMYNEXT – Sri Lanka’s Trade Minister Nalin Fernando threatened egg producers to reduce the egg prices or face stiff competition in the market with imported eggs, as controls on maize imports that drive up feed costs.

Sri Lanka imports 30 million eggs monthly after the prices hit 65-70 rupees per egg after the government slappped price controls on eggs, amid maize import controls, leading to culling of the layer chick population and parent birds in hatcheries.

Minister Fernando said the egg prices have come down to as low as 35 rupees in government-owned Sathosa super markets.

“We will be importing until December 31. If we haven’t imported eggs, they have estimated the price to hit 90-100 rupees,” Fernando told reporters in Colombo at a media briefing.

“So, we were compelled to import eggs and that has enabled the consumers to buy eggs at a controlled price.”

Sri Lanka’s eggs were around 20 to 25 rupees before the rupee collapsed in April last year from 200 to 360 to the US dollar .

Sri Lanka’s chicken meat and egg prices are generally higher than the world due to import licensing on maize which has pushed up production costs.

Maize taxes are only cut to make triposha, a supplement for children facing malnutrition which was started during severe import controls and money printing by macro-economists running government and central bank policy in the 1970s.

In August 2023 Sri Lanka lowered the so-called maize mafia tax, which allows politically connected collectors and farmers to make large profits to 25 rupees from 75 rupees a kilogram.

RELATEDSri Lanka lowers ‘maize mafia’ tax

The maize tax, among the worst reggressive protectionist food taxes on the island that used to drive self-sufficiency (autarky) as well as the linked import licenses have been blamed for firing corruption and childhood malnutrition by some critics.

Sri Lanka’s daily egg output is estimated to have dropped to about 4 million a day from the normal 7 million after farmers killed layer chicken for meat in the wake of price controls imposed by the Consumer Affairs Authority last year.


Sri Lanka needs around 80,000 parent birds to produce the required layer chicks but there were only around 42,000 in the first quarter of this, at the main hatcheries according to the All Island Poultry Association. It takes about 5.5 months to grow both layer parent birds and birds.

“There is a huge demand for eggs next month,” he said referring to the festive season.

“Most egg-based manufacturers have already bought eggs for their products. For instance, large scale cake and biscuit manufacturing producers have already purchased eggs for the next month. So, the demand could come from those who buy eggs for daily use.”

“So I don’t think there will be a huge price increase in eggs. If the egg prices are increased, either we have to increase the egg imports or we will have to extend the time duration of imports (beyond December 31).

“The decision depends on the hands of egg producers. Not me. What I have in my hand is to respond if they increase the prices.”

Analysts say individual egg producers have no control over egg prices except some branded producers who have some pricing power. The price of eggs are decided in the free market and meat prices in the live bird market.

“Everything will depend on if the egg price could be borne by consumers,” Minister Fernando said. “Egg is the least cost nutritious source. Chicken is expensive, fish is expensive, and other meats are also expensive. So we have a huge responsibility to provide it at a lower price.”

“So, the decision on how many eggs we should import and for how long we should import is depending on the egg producers of this country. The price they have fixed is not on par with the cost of egg production in the recent past. They are making an exorbitant profit. So the egg prices must come down in the future.”

“We have been talking about this issue for the last 8-10 months. That time period is more than enough to establish a proper layer flock. Usually it takes four-and-a-half months to lay eggs for the first time.

“In six months, they are very good at laying eggs. And from there to one-and-half-year, the producers can get eggs with 75-78 percent efficiency. So now the layer flocks are at a good stage . So we need to end this issue. I hope this issue will end with December 31. If not, the trade minister will have to intervene.”

While free trade in eggs are a check on domestic farmers and can help reduce childhood malnutrition, without free trade in maize and other inputs, final products cannot compete with countries like India that export maize and has global prices for feed.

Poultry farmers have said they could export meat if there is free trade in inputs. (Colombo/Nov 9/2023 – Update II)

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Melco’s Nuwa hotel to open in Sri Lanka in mid-2025

ECONOMYNEXT – A Nuwa branded hotel run by Melco Resorts and Entertainment linked to their gaming operation in Colombo will open in mid 2025, its Sri Lanka partner John Keells Holdings said.

The group’s integrated resort is being re-branded as a ‘City of Dreams’, a brand of Melco.

The resort will have a 687-room Cinnamon Life hotel and the Nuwa hotel described as “ultra-high end”.

“The 113-key exclusive hotel, situated on the top five floors of the integrated resort, will be managed by Melco under its ultra high-end luxury-standard hotel brand ‘Nuwa’, which has presence in Macau and the Philippines,” JKH told shareholders in the annual report.

“Melco’s ultra high-end luxury-standard hotel and casino, together with its global brand and footprint, will strongly complement the MICE, entertainment, shopping, dining and leisure offerings in the ‘City of Dreams Sri Lanka’ integrated resort, establishing it as a one-of-a-kind destination in South Asia and the region.”

Melco is investing 125 million dollars in fitting out its casino.

“The collaboration with Melco, including access to the technical, marketing, branding and loyalty programmes, expertise and governance structures, will be a boost for not only the integrated resort of the Group but a strong show of confidence in the tourism potential of the country,” JKH said.

The Cinnamon Life hotel has already started marketing.

Related Sri Lanka’s Cinnamon Life begins marketing, accepts bookings


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Sri Lanka to find investors by ‘competitive system’ after revoking plantations privatizations

ECONOMYNEXT – Sri Lanka will revoke the privatization of plantation companies that do not pay government dictated wages, by cancelling land leases and find new investors under a ‘competitive system’, State Minister for Finance Ranjith Siyambalapitiya has said.

Sri Lanka privatized the ownership of 22 plantations companies in the 1990s through long term leases after initially giving only management to private firms.

Management companies that made profits (mostly those with more rubber) were given the firms under a valuation and those that made losses (mostly ones with more tea) were sold on the stock market.

The privatized firms then made annual lease payments and paid taxes when profits were made.

In 2024 the government decreed a wage hike announced a mandated wage after President Ranil Wickremesinghe made the announcement in the presence of several politicians representing plantations workers.

The land leases of privatized plantations, which do not pay the mandated wages would be cancelled, Minister Siyambalapitiya was quoted as saying at a ceremony in Deraniyagala.

The re-expropriated plantations would be given to new investors through “special transparency”

The new ‘privatization’ will be done in a ‘competitive process’ taking into account export orientation, worker welfare, infrastructure, new technology, Minister Siyambalapitiya said.

It is not clear whether paying government-dictated wages was a clause in the privatization agreement.

Then President J R Jayewardene put constitutional guarantee against expropriation as the original nationalization of foreign and domestic owned companies were blamed for Sri Lanka becoming a backward nation after getting independence with indicators ‘only behind Japan’ according to many commentators.

However, in 2011 a series of companies were expropriation without recourse to judicial review, again delivering a blow to the country’s investment framework.

Ironically plantations that were privatized in the 1990s were in the original wave of nationalizations.

Minister Bandula Gunawardana said the cabinet approval had been given to set up a committee to examine wage and cancel the leases of plantations that were unable to pay the dictated wages.


Sri Lanka state interference in plantation wages escalates into land grab threat

From the time the firms were privatized unions and the companies had bargained through collective agreements, striking in some cases as macro-economists printed money and triggered high inflation.

Under President Gotabaya, mandating wages through gazettes began in January 2020, and the wage bargaining process was put aside.

Sri Lanka’s macro-economists advising President Rajapaksa the printed money and triggered a collapse of the rupee from 184 to 370 to the US dollar from 2020 to 2020 in the course of targeting ‘potential output’ which was taught by the International Monetary Fund.

In 2024, the current central bank governor had allowed the exchange rate to appreciate to 300 to the US dollar, amid deflationary policy, recouping some of the lost wages of plantations workers.

The plantations have not given an official increase to account for what macro-economists did to the unit of account of their wages. With salaries under ‘wages boards’ from the 2020 through gazettes, neither employees not workers have engaged in the traditional wage negotiations.

The threat to re-exproriate plantations is coming as the government is trying to privatize several state enterprises, including SriLankan Airlines.

It is not clear now the impending reversal of plantations privatization will affect the prices of bids by investors for upcoming privatizations.

The firms were privatized to stop monthly transfers from the Treasury to pay salaries under state ownership. (Colombo/May25/2024)

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300 out of 1,200 Sri Lanka central bank staff works on EPF: CB Governor

ECONOMYNEXT – About 300 central bank staff out of 1,200 are employed in the Employees Provident Fund and related work, Governor Nandalal Weerasinghe said, with the function due to be transferred to a separate agency after a revamp of its governing law.

“When it comes to the EPF there is an obvious conflict of interest. We are very happy to take that function out,” Governor Weerasinghe told a forum organized by Colombo-based Advocata Institute.

“We have about 300 staff out of 1,200 including contract staff, almost 150 of permanent staff is employed to run this huge operation. I don’t think the central bank should be doing this business,”

The EPF had come under fire in the past over questionable investments in stocks and also bonds.

In addition, the central bank also faced a conflict of interest because it had another agency function to sell bonds for the Treasury at the lowest possible price, not to mention its monetary policy functions.

“There has been a lot of allegations on the management of this fund. This is the biggest fund of the private sector; about 2.6 million active, I think about 10 million accounts.

“When it comes to EPF, obviously there’s another thing. We obviously have, in terms of resources, on the Central Bank, that has a clear conflict because we are responsible for the members.

“We have to give them a, as a custodian of the fund, we have to give them a maximum return for the members.

“For us to get the maximum return, on one hand, we determine the interest rates as multi-policy. On the other hand, we are managing public debt as a, raising funds for the government.

“And on the third hand, this EPF is investing 90 percent in government securities. And also, interest rates we determine, and they want to get the maximum interest. That’s a clear conflict, obviously, there’s no question.”

A separate agency is to be set up, he said.

“It’s up to the government or the members to determine to establish a new institution that has a trust and credibility and confidence of the members that this institution will be able to manage and secure an interest and give them a reasonable return, good return for their lifetime savings,” Governor Weerasinghe said.

“The question is that how whether we have whether we can develop that institution, whether we have the strong institution with accountability and the proper governance for this thing.

“I don’t think it should be given completely to a private sector business to run that. Because one is that here we have no regulatory institution. Pension funds are not a regulated business.

“First one is we need to establish, government should establish a regulatory agency to regulate not only the EPF business fund, there are several other similar funds are not properly regulated.

“Once we have proper regulations like we regulate banks, then we can have a can ensure proper practices are basically adopted by all these institutions.

“Then you can develop an institution that we who can run this and can be taken back by the Labour Department. I’m not sure Labour Department has the capacity to do all these things.”

While some EPF managers had come under scrutiny during the bondscam and for questionable stock investments, in recent years, it had earned better returns under the central bank management than some private funds that underwent debt restructuring according to capital market analysts with knowledge of he matter. (Colombo/May24/2024)

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